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The three big options for homeowners are short sales, loan modifications and refinance. What have you seen that actually worked?

Options: Refinance, Loan Modification, Short sale.

Refinance

Basics: Refinancing is when you are paying off your old loan with a new loan with lower interest rates.

• The goods: This option is suitable for those who plan on staying in their home for awhile and/or those who are in an adjustable mortgage rate situation and want to solidify a fixed interest rate.

• The bads: You will be paying closing costs when you refinance and in order to refinance, you must have equity in your home.

Loan Modification

Basics: A Loan modification is typically when you modify the current loan to make payments more affordable via lower interest rates and/or extending the duration of the loan (30yr to 35yr).

• The goods: Loan mods can be a means to prevent foreclosure when you are delinquent on payments. Lowering payments could result in a more affordable living situation.

• The bads: Back in 2010, the Today Show reported loan mods helped only 5% of applicants. Yes, it does lower payments and prevent foreclosure but it does not lower the 5 hidden costs of homeownership. The home may still be above your affordability level. In the long run, a loan mod would prolong the problem and not fix it as you are simply extending the term of the loan thus paying more payments/interest and not building equity.

Short Sale

Basics: A Short sale is when you sell your property for less than what is owed and negotiate the difference with your lender.

• The goods: A short sale allows the homeowner to walk away from their home and in most cases, be forgiven of the remaining balance owed to the lender(s). Normally there are taxes involved with the forgiven balance. However, until the end of 2013, the Mortgage Forgiveness Debt Relief act grants immunity on primary residences.

• The bads: A short sale will put a ding on your credit score and it will take about 90-120 months to complete one.

These are just the basics but would love to know what your experience is on each of these options.

Thanks

www.seattleshortsaleblog.com

Short Sale , Deed in Lieu, Loan Modification, Foreclosure, HAMP, HAFA in California and what they mean to you.

Under the HAFA program you have the option of doing a Short Sale or Deed in Lieu. According to current FHA guidelines you can buy another home 2 years after the short sale. The lenders are required to give you at least 120 days to market the home and obtain an offer. The lender does not have to give you more time and you are required to follow the guidelines set forth by the lenders. Many lenders are closing short sales sooner than 120 days so be prepared to move. The only thing I have seen that has been extending the short sale timelines is Mortgage Insurance.

A Deed in Lieu is when you sign the deed over to the lender and walk away from the house. The lender has to give you permission to do so and it has to be a clean marketable title. That means no other liens on the property, second mortgage, mechanics lien, taxes are paid, etc.

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